Patent Licensing Terms

• Lawyers prepare patent license agreements between inventors and third parties.Legal Law Justice image by Stacey Alexander from Fotolia.com
  
  In the United States, the U.S. Patent and Trademark Office (USPTO) grants patents for up to 20 years. Once the USPTO grants an inventor a patent, that inventor has a legal right to the process or product outlined in the patent. The USPTO considers the patent personal property of the inventor, who may license that patent to third parties. Licensing a patent allows third-party use of the invention without fear of legal recourse from the inventor.
  
  

Exclusivity

• Patent licenses fall into one of two categories: exclusive and non-exclusive. Exclusive patent licensing agreements allow a third party sole right to use the process or product described in the patent. If the inventor or the licensee finds another party using information from the patent, they may sue that other party and seek damages. Non-exclusive patents grant third parties the right to use information contained within the patent, though the inventor reserves the right to license the patent to additional parties.
  
  

Geographical Constraints

• Patent licensing agreements generally spell out the geographical limits of the licensee’s rights. For example, an inventor may license a patent for use only in the United States or only in Europe. At their discretion, inventors may enter into several exclusive patent licensing agreements—each with geographical boundaries that do not overlap. Alternatively, a patent licensing agreement may not spell out any geographic constraints, allowing the licensee to use the information contained within the patent on a worldwide basis.
  
  

Time Period

• Patent license agreements all have an expiration date. At most, patent licensing agreements run to the end of the patent’s life, when intellectual property protection for the inventor ceases. Inventors may wish to enter into a shorter agreement, allowing time to renegotiate if their invention proves extremely profitable or the licensee less than desirable.
  
  

Remuneration

• Inventors usually sell licensing rights to their inventions in order to make money. Patent licensing agreements must detail out remuneration received by the patent holder. Often times, inventors receive an upfront payment for licensing rights, then continuing royalty payments based on sales of the licensed invention.